1001 Reasons Not to Be an MSP

In another thread the idea of a book on "1001 Reasons Not to Be an MSP" came up. And I thought "what a great idea for a thread". We should collect reasons why starting an MSP is not a good idea or reasons to be wary of starting one.

Getting customers isn't trivial. People often make it seem easy, but it is not. Most MSPs start by having an anchor customer on day one and building an MSP around an existing customer, many never get another one. If you try to start an MSP without that opportunity you have little chance of getting to critical mass before running out of funds.

This is a bigger deal than can be easily described. Customers generally hire MSPs because they know little about IT. In turn, they have little means to evaluate when their MSP is protecting them or screwing them and often lash out at MSPs trying to help them the most and lean on those taking the most advantage of them. Not universally but it is a real problem. Because the industry is full of con men and slick salespeople who all have the loudest voices, the honest IT pros and vendors trying to help the customers often look like they are going against the industry because the customer can't identify a legitimate industry voice from that of a sales person. Or don't care to put in the effort to do so.

You have to wear too many hats. Sales, Marketing, Customer Relations, you are rarely just the IT guy.

That's big. Being good at IT doesn't imply that you are good at sales, marketing, business or accounting. Very few people are good at all of those. At best you are a renaissance man and will have to task switch like crazy. At worst you will have to hire lots of people to do each of those things. It takes a lot of people to support a single full time IT pro.

Making the leap from one man MSP to a functional multi-person company is not an organic one. Only in the rarest cases can you just go from working alone to having a team. The cost of bringing on that first employee has to come from somewhere and unless you can bring on new clients that pay for the new staff at the exact same time as the new staff you will have major financial overhead to carry.

Making the leap from one man MSP to a functional multi-person company is not an organic one. Only in the rarest cases can you just go from working alone to having a team. The cost of bringing on that first employee has to come from somewhere and unless you can bring on new clients that pay for the new staff at the exact same time as the new staff you will have major financial overhead to carry.

Making the leap from one man MSP to a functional multi-person company is not an organic one. Only in the rarest cases can you just go from working alone to having a team.

Would this not also apply to businesses of other shapes and sizes?

If you want to go from a single restaurant to 2 locations, there is a cost, there is a leap you have to make, a decision which carries risks but it could be an investment that pays off, many times it does not but on the occasions it does pay off, wow.

Making the leap from one man MSP to a functional multi-person company is not an organic one. Only in the rarest cases can you just go from working alone to having a team.

@Breffni-Potter said:

Would this not also apply to businesses of other shapes and sizes?

If you want to go from a single restaurant to 2 locations, there is a cost, there is a leap you have to make, a decision which carries risks but it could be an investment that pays off, many times it does not but on the occasions it does pay off, wow.

It does, but the leap form single to more than one is huge. It maybe less people or tings than opening a second location, but it is a much different animal in other ways.

Making the leap from one man MSP to a functional multi-person company is not an organic one. Only in the rarest cases can you just go from working alone to having a team. The cost of bringing on that first employee has to come from somewhere and unless you can bring on new clients that pay for the new staff at the exact same time as the new staff you will have major financial overhead to carry.

Making the leap from one man MSP to a functional multi-person company is not an organic one. Only in the rarest cases can you just go from working alone to having a team.

Would this not also apply to businesses of other shapes and sizes?

If you want to go from a single restaurant to 2 locations, there is a cost, there is a leap you have to make, a decision which carries risks but it could be an investment that pays off, many times it does not but on the occasions it does pay off, wow.

I think that people opening restaurants have a very different situation. Sure, opening another location has costs, but the existence of the restaurant, in theory, brings in revenue itself just by being open. Adding staff to an MSP does not do that. You have to have the staff and then figure out how to generate work for them. Just having the extra staff does not itself generate work.

Because no customer "to be" knows what you do and you have to educate every single one of them before even finding out if they might make a good customer. It is really tough working in an industry where the people who need you most have no idea what you do.

Making the leap from one man MSP to a functional multi-person company is not an organic one. Only in the rarest cases can you just go from working alone to having a team. The cost of bringing on that first employee has to come from somewhere and unless you can bring on new clients that pay for the new staff at the exact same time as the new staff you will have major financial overhead to carry.

OMG, it's super hard. I was at the end of the diving board, digging through resume's meeting with folks, and lost a key client to a big box MSP round here, had to climb back down the ladder, eat a piece of humble pie, and figure out how to grow...

Running an MSP is not for the faint of heart. There a days you don't sleep, oh wait that's months you don't sleep. There are days you don't eat or shower or pee. Work is your life when you are on your own.

Accounts receivable runs your life. Customers often don't pay on time or at all. You spend a huge amount of time chasing down deliquent and dead beat clients. You want to cut them loose but they represent a huge amount of your revenue and if you don't have them you don't have enough work. You often get stuck doing work for people who rarely pay, sometimes not for six months or a year, and you can't do work for other clients that may or may not pay because you are trying to service the one that you have - stuck with the bird half in the hand since you have no way to know if the next client is going to pay. You end up losing a fortune of your projected revenue because you never manage to collect it, you have to send it out to collections and give up 90% of it or you have to wait so long on it that it has lost 20% of its value, if you are lucky.

I had a guy who left to set up on his own. He was brilliant. Really clever, really experienced and cheap. The kind of guy every SMB would benefit from employing. His business failed very quickly because he couldn't sell himself. He couldn't sell himself to new clients. He only got gigs with people that already knew him, and that wasn't a big enough pool to sustain him.

Ultimately, this is the reason I've never set up my own business. I'd need a partner who could sell, but I've never managed to find the right person at the right time, so it's never happened.

@scottalanmiller this is not, nor has it ever (for me) been the case. I've had two clients who ended up being super slow to pay. Both were restaurant groups and after the first project went slowly, I halted work until payment was received. They payed on time from then on out.